Thursday, May 5, 2011
A collapse in oil was good news for Japanese yen
The most awaited news in Forex market from Great Britain (Bank of England Rate Decision) and Europe (European Central Bank Rate Decision) came as expected. Both banks left interest rates unchanged. We see some consolidation in both eur/usd and gbp/usd. This tells me that the pair will continue their uptrend and dollar will continue falling. Commodity currencies are falling at the moment, but I think it is more connected with collapse in oil, silver and other commodities.
A collapse in oil was good news for Japanese yen. Gbp/jpy was in a pretty small daily range through the night but during European session the pair collapsed. It has an obvious connection in decrease of oil prices. As long as it continues, yen will strengthen. In my opinion gbp/jpy was a good candidate for a breakout trade today. A sell stop order had to be placed below today’s lows and a breakout would have taken you down together with the market for a profit of one hundred pips, at least. Now the pair is falling back into a daily range.
Yesterday silver repeated the same technical pattern (123) two times. I mentioned about the first one in my previous post. After a session the commodity came back to number 2 of the pattern, which was previously support, tried to break it and failed. It formed another 123 pattern, now number 2 being at 41.35 and 1 at 41.85 (support became resistance) and then broke down continuing its’ short term down trend.
The day, to say nothing of the week is not over yet and we might see some pretty nice move developing. If eur/usd and especially gbp/usd fail to go up, a breakout down below their support could be taken.
Read my previous post:
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